Question

What managerial actions or decisions would you be taken in your company related to your product in the market.

if: After the lockdown is being eased, your country decide to increase the VAT From 20% to 25%

Answer 1

If the vat on the company's product increases then the end price for the customers increases and this would lead to a fall in demand for the product. In order to prevent such a situation there are some ways to retain the customers like giving extra discounts on purchases, tie up with banks to roll out combined offers in the short run while in the long run finding cheaper substitutes for raw materials, cost cutting in the production process, producing new variants of the profucts in order to make it more attractive for customers. In the short run the company might have to bear some brunt of the increased tax depending on the elasticity of demand for the product in the market.